In a presentation Australian economist Steve Keen delivered recently in New Zealand, he describes how, prior to the GFC, he was compiling data for his role as an expert witness in a predatory loan case for NSW Legal Aid. Looking to parse the accuracy of a claim that private debt to GDP had been rising “exponentially,” Keen found that the data indeed showed a near perfectly exponential rise from 1964 on—a clear warning sign that such a trajectory was unsustainable.
Although Australia and New Zealand fared better in the GFC than did Europe or the U.S., Keen’s subsequent research into UK and U.S. Treasury data show that while the U.S. experienced a sharp dropoff in private debt, the UK is rather among the worst countries in terms of aggregate private debt to GDP, and Australia has yet to see a significant turnaround; though when it does, it will call into question the viability of an economic model premised on such growth.
View the video below, or read the original post here.
4 Responses to “Steve Keen: Should We Be Worried About Australia’s Private Debt Level?”
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